Suit filed against ASHW:
SAN DIEGO--(BUSINESS WIRE)--Jan. 22, 1999--Milberg Weiss today announced that a class action has been commenced in the United States District Court for the Southern District of California on behalf of purchasers of Ashworth Inc. (''Ashworth'') (NASDAQ:ASHW - news) common stock during the period between Sept. 4, 1997 and July 15, 1998 (the ''Class Period'').
The complaint charges Ashworth and certain of its officers and directors with violations of the Securities Exchange Act of 1934. Ashworth designs, markets and distributes sports apparel, headwear and shoes with products retailing in golf proshops, resorts and department stores. After a successful 1993-1994, during which Ashworth was profitable and its stock traded in the $10-$14 range, Ashworth's business performed very poorly from 1995 to mid-97 due to serious inventory problems, quality-control issues, and flat sales. In fiscal 1997, Ashworth's business appeared to stage a major recovery, as Ashworth reported increasing gross margins and strong EPS growth. As a result of Ashworth's F97 and early F98 performance, which was coupled with (and made more credible) forecasts of even stronger EPS growth in F98 and F99, Ashworth's stock was a very strong performer, moving up to $14 by early 1/98 and on to a Class Period high of $18 per share in 3/98. During the Class Period, Ashworth's executives made extremely positive statements about Ashworth's business.
The complaint alleges that in July 1998, Ashworth revealed very disappointing 3rdQ F98 results, well below forecasted levels, and that it expected poor results for the balance of F98, later admitting that it had experienced production problems in offshore factories and had inadequate quality control in those facilities and that it was going to implement double sourcing (essentially admitting that, contrary to prior representations, it did not have double sourcing). Upon this news, Ashworth's stock declined to $8-1/8 on huge volume of 7.9 million shares, more than 19 times its daily average. While Ashworth's stock was inflated during the Class Period, certain of Ashworth's top executives and directors named as defendants sold more than 1.5 million shares of their Ashworth stock, for $20.7 million in proceeds.
Plaintiff seeks to recover damages on behalf of all purchasers of Ashworth common stock during the Class Period (the ''Class''). The plaintiff is represented by two law firms, including Milberg Weiss Bershad Hynes & Lerach LLP, who have expertise in prosecuting investor class actions and extensive experience in actions involving financial fraud. |
